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#1502681 - 01/31/11 05:10 PM loan to illegal
SnowRed Offline
Junior Member
Joined: Oct 2010
Posts: 42
East Coast
Through a review, we have identified a loan to an illegal. When the loan was underwritten, approved and booked, the information was missed. We gave her the benefit of the doubt and asked her to bring it the proper documentation. As you can guess, we haven't rec'd it. Although it is not prudent lending practice to allow this to happen, are we in some other trouble from another reg?

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BSA/AML/CIP/OFAC Forum
#1502686 - 01/31/11 05:14 PM Re: loan to illegal SnowRed
Dani York, CRCM Offline
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Dani York, CRCM
Joined: Apr 2005
Posts: 3,663
TN
This could be a CIP violation, depending on what your CIP requirements are.
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#1502739 - 01/31/11 05:52 PM Re: loan to illegal Dani York, CRCM
SnowRed Offline
Junior Member
Joined: Oct 2010
Posts: 42
East Coast
It is a CIP violation per our policy. But what do I do to fix it? Demand the loan? What are my options?

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#1502777 - 01/31/11 06:38 PM Re: loan to illegal SnowRed
Dani York, CRCM Offline
Power Poster
Dani York, CRCM
Joined: Apr 2005
Posts: 3,663
TN
There is nothing you can do to fix the CIP violation or the exception to policy. You should document the finding and shore up any holes in your procedures to prevent this from happening again.

You can call the loan if your loan contract provides for it, however, there may be issues regarding collection of the debt (sorry, that's not my area of expertise).
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

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#1503052 - 01/31/11 11:08 PM Re: loan to illegal Dani York, CRCM
*W*W* Offline
Platinum Poster
Joined: Feb 2010
Posts: 835
Is the loan contract valid if the borrower is here illegally?
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Opinions expressed are my own and do not reflect the views of my employer.

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#1503095 - 02/01/11 01:19 PM Re: loan to illegal *W*W*
Dani York, CRCM Offline
Power Poster
Dani York, CRCM
Joined: Apr 2005
Posts: 3,663
TN
From my basic understanding of contract law, a contract is legally binding if 2 (or more) parties of sound mind are in agreement and sign the document. I don't think citizenship or immigration status affect one's ability to enter into a contract. But I'm not a lawyer and that would be a better question for bank counsel.
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

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#1503147 - 02/01/11 02:14 PM Re: loan to illegal Dani York, CRCM
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,593
Cape Cod
Citizenship and residency status don't affect the validity of the loan contract but may affect your ability to collect if the borrower leaves the country.
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John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

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#1503717 - 02/01/11 10:40 PM Re: loan to illegal John Burnett
SnowRed Offline
Junior Member
Joined: Oct 2010
Posts: 42
East Coast
Very helpful. Thank you.

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#1503930 - 02/02/11 05:16 PM Re: loan to illegal SnowRed
NEAuditor Offline
New Poster
Joined: Dec 2008
Posts: 6
Nebraska
I didn't see it specifically mentioned above, but you should also follow your SAR decisioning process as presumably some piece of identifying information was false/stolen.

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#1504135 - 02/02/11 08:56 PM Re: loan to illegal NEAuditor
SnowRed Offline
Junior Member
Joined: Oct 2010
Posts: 42
East Coast
Good point. Thank you.

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